Mumbai: Indian dairies are likely to raise milk prices by Rs1-2 per litre, the second rise this year, on higher procurement cost and a supply shortfall, industry officials said.
Prices rose in February and is likely to see another increase in June, this being a “lean season” for milk production, they said. “We are paying 20% more to the farmers than last year,” said R.S. Sodhi, chief general manager of Gujarat Co-operative Milk Marketing Federation Ltd (GCMMF), which owns India’s best known dairy brand, Amul. “Internationally, milk prices have gone up by almost 50%. Demand is continually rising.”
Procurement cost has risen 13.92% to Rs18 a litre and is expected to rise further, Sodhi said. Warana Sahakari Dudh Utpadak Prakriya Sangh Ltd, one of the largest milk and milk products suppliers in Maharashtra, will raise prices of skimmed milk powder by 5.4% to Rs136 per kg by Friday, said sales manager R.V. Desai. The co-operative plans to raise milk prices by Rs1-2 a litre in June, he said.
Other dairies tend to raise prices only after Amul and Mother Dairy increases come into effect, officials said. Mother Dairy is a brand owned by a subsidiary of the National Dairy Development Board.
A global market shortage caused by a drought in Australia, one of the largest exporters, pulled prices up, officials said. India, the world’s largest producer of milk, banned export of skimmed milk in February to ease prices at home.
Skimmed milk powder exports jumped almost 95% in the last 10 years and the ban on exports dampened the dairy market and came at the wrong time, saidAnimesh Banerjee, president of Indian Dairy Association.
“Supply-demand situation is not very critical in India. Government’s decision to ban milk exports in February was improper,” he said.
India produced 97.1 million tonnes (mt) of milk in the year to March 2006 and is estimated to surpass 100mt this year, according to data from the Union animal husbandry ministry.
“India’s milk production is growing at an annual rate of 3-4%. Farmers are putting more cattle in the farms,” said GCMMF’s Sodhi.